What is a Stakeholder? 6 Things You Should Know
The goal is not to make everyone happy, but to succeed.
The word stakeholder is used to mean many different things in government, the nonprofit sector and in business. It’s a broad and confusing term that takes in everyone who has any interest in what an organization does. They have a “stake” or interest in the decisions and fate of your organization. Is that broad enough for you? Although the term is loose, it still has meaning. It’s important to understand some key concepts about this term and the people it describes. Understand that:
- They aren’t necessarily customers. Customers are a subset of your stakeholders but many people use the terms interchangeably. Some people with an interest in your organization and its mission will never do business with you or be served by you. The term has a much broader meaning than simply a customer.
- They aren’t all created equal. Some stakeholders (like the ones who control your budget) are more important than others. You need to understand the influence, resources and power each stakeholder or stakeholder group has in order to navigate your environment successfully.
- They have different interests. For example in a publicly traded company, investors may favor paying out profits to stockholders while employees or management might favor bonuses. Both of these groups are stakeholders in the business, but they can often have different or opposing interests.
There are also different types of stakeholders in different sectors.
- In Government: Government has one of the most complicated sets of stakeholders. Power, accountability and funding are split not only among different levels of government, from local to state to federal, but also between departments and within departments. In the broadest terms, government stakeholders include all citizens. But a successful government leader needs to balance the interests of citizens, the legislature, the politicals at the top of their organization, oversight groups like inspectors general, and a variety of organized and not so organized pressure and interest groups.
- In the Nonprofit Sector: Just because your goal isn’t to make a profit, it doesn’t mean that you don’t have multiple and powerful people and organizations with a stake in what you do. Nonprofits have boards often with disparate members, communities and causes they serve, partner and competing organizations, and multiple camps within the organization that may view the mission from different perspectives.
- In Business: There is a myth that businesses only focus on customers or exist only to serve the interests of shareholders. No question these are the primary stakeholders, but a savvy leader doesn’t forget that they aren’t the only ones. Employees, partner companies, the communities they operate in, government/regulators, and many others are also important to their success.
The key for leaders in any of these sectors is to understand your stakeholder base and develop engagement, mitigation and management strategies for each. The goal is not to make everyone happy or to turn everyone in your favor. In some cases those goals are not achievable. The goal has to be to better understand your environment and turn this knowledge to your advantage.